I don't think it's noisy, but any more dithering and it would be; gotta agree that you need to tame it some, because it gives the tree a 'fuzzy' texture. But most of it is perfectly fine, I think you should keep it mostly dithered; smoothing it out would create a plastic tree, and who wants that? XD
Not really a crit here, just a personal thing--I liked the more saturated palette, at least for the brightest shades, too.
Without a doubt, you're a fast learner! My mouth hit the floor when you posted your second version.
